UK Government Proposes Inheritance Tax Reforms

Recent changes to inheritance tax (IHT) in the UK, announced in the Autumn Statement, will fix thresholds until 2030 and impose caps on Business and Agricultural Property Relief starting April 2026, while also bringing unspent pension pots into the IHT calculation from April 2027. Chancellor Rachel Reeves has intensified tax enforcement efforts, hiring 5,000 additional tax investigators to combat evasion, amidst controversies surrounding pension adjustments affecting former mineworkers. Tax expert Dan Neidle has called for policy revisions, suggesting a higher IHT cap for farmers, while others warn that the reforms could negatively impact food production. AJ Bell's CEO criticized the planned taxation of inherited pensions as a complex and burdensome measure that could undermine the pension system, with potential tax rates reaching 64% for higher-rate taxpayers. The Treasury anticipates generating £1.5 billion annually from the new pension tax rules, but critics argue it complicates inheritance processes at sensitive times for families. Overall, these changes have sparked significant debate regarding their implications for various sectors in society.